Thanks to the ANVIL Business Club, I had the pleasure of hearing Mr. Enrico “Rikki” Dee, CEO and Founder or Foodee, talk about his success secrets as a restaurant tycoon. The enlightening talk happened last February 19 at the Marco Polo Ortigas.
You may find his brands familiar as they are as follows:
- MESA: Classif Filipino dishes with a modern twist. This is their biggest brand at 62 restaurants nationwide. They hope to reach 100 stores by 2021
- Foodcourts at BGC and Sta. Lucia
- Food court brands under Foodlink — Chin’s Express, Inihaw Express and Handaan
- Todd English
- Tim Ho Wan
- Hawker Chan
- Tsuta Ramen
- Foo’d in Shangrila
- Sunnies Glasses, Sunnies Specs Optical (Prescription Glasses) and Sunnies Cafe: Second son and daughter-in-law put up the highly successful Sunnies Studios and Sunnies Specs Optical. Sunnies Face launched last year.
- Bench Cafe: A collaboration with Bench. Bench does the vision and the marketing, while Mr. Dee’s company handles the operations
- Llao Llao: A Spanish yogurt brand
- Landrover and Jaguar distributor
Overall, his companies number:
- 15 different concepts
- 85 fast food chains in all major malls
- 353 stores in total — 158 retail stores and 195 restaurants
- 4,800 employees (from 5 staff in the beginning) — 3000 in restaurants, 1,800 in retail
- Sales of Php 8,000 per day, to currently Php 10M per day
- Two buildings including One Corporate Central
- Three Malls in Binan, Dasmarinas and Binagoonan
Through the years, his company transformed itself from local to global, mom and pop store to corporate, and from the food court to Michelin Star restaurants. Last year, Mr. Dee opened his first international store in Qatar, and plans to open another one in Los Angeles soon. As Filipino dishes grow increasingly popular, Mr. Dee hopes to introduce Filipino food to the world, and has started to invite foreign consultants to improve his products’ presentation and colors to make them more palatable to international tastes.
His speech was short and sweet, and he gave us the following words of wisdom:
- Tsun tao tsun beh — You need to look at the miniscule details and waste nothing. Look at your costs and ensure that you’re really squeezing everything from a detail. For example, there’s a big difference with a recipe calling for 1 teaspoon of salt and 4 teaspoon of salt. Even though the cost of a teaspoon of salt is small, multiply it with 195 restaurants and the cost adds up. So you need to look at the miniscule details of every cost
As Eric the son mentioned, “Products spoil. They have to be sold by the day. That’s why we have to take a look at what we order and ensure that every cost goes down to the max. Remember, every piso earned is piso saved.”
2. Kwa tao kwa beh — You need to understand and know your business inside out, from the front to the back. If you do not know your business, you should not do business.
3. Do not be afraid to fail. It’s ok to fail. Just don’t repeat it.
4. You have to love what you do.
Mr. Dee started off as a son of a successful businessman who owned a lumber business in the Quezon province. While not lacking in everyday needs, Mr. Dee found himself insecure of his position in his family.
For one, he was the 5th in a family of 7 children, thus ensuring that he had to answer to a hierarchy with so many more senior siblings older than he was. Two, the lumber business was also a sunset business that had to be shared with his other siblings. His father bought out his Uncle from the lumber business, and while it provided a lot of financial security for the family, Mr. Dee did not like the idea of working for his siblings in the future.
So he ventured out to do his own business.
He tried so many different businesses in the beginning. After graduating from San Beda College, he ventured into importation since his uncle and father-in-law were both importers. Rikki imported stockings, hairlash curlers and everything under the sun. Mr. Dee finally ventured into the importation of toys, and was ecstatic to see that he has received purchase orders for 90% of the toys that he imported that last quarter of the year during Christmas season. With the promise of payment the next quarter, Mr. Dee dreamed of finally being able to buy a house for his young family from the proceeds of the business.
Imagine his surprise after receiving his payment — the check was only 60% of the promised value as his customer charged him 40% of the inventory as rejects!
Given that many of his toys were winding and battery operated, there were a lot of rejected items that he could no longer resell. Despite having a lot of sales, Rikki lost a lot of his money on the toy business and needed to start from scratch again.
A simple Chinese retaurant in Pasay Road, Makati
Mr. Rikki sold his car to raise the capital to open a small restaurant in Pasay Road, Makati. Since he believed that every store needs a specialty, he perfected the dish of fish head as the store specialty, and that became his competitive advantage.
He prides himself in building his restaurant empire from scratch, and yet, still credits his father for fully supporting him in pursuing his dreams. While it is true that Rikki sold his car to raise the capital for his toy business, his father helped him out by buying him another car to use.
His business was a modestly successful one due to the house specialty of fish head. However, his life will be changed by one of his loyal customers who would often book a seat late nights at his restaurant on Wednesdays, Mr. Henry Sy Sr.
After one unremarkable meal around 1985-1986, Mr. Henry Sy Sr. asked him if he would be interested to open at SM North EDSA Foodcourt.
Of course, Mr. Dee was interested!
While he admitted that he was young at that time, he was blown away after visiting the admin office at SM North EDSA where after a few subsequent meetings, was able to get a slot at the food court.
That was how Foodee started. Currently, their food court brands under the Foodlink company, now include Inihaw Express, Chin’s Express and Handaan.
Mr. Dee admitted that being a provinciano gave him a more competitive edge. It was easy to go nationwide because he knew and understood how people lived in the province. While other businessmen were afraid of venturing beyond the city, he embraced the provinces head on and knew where to open.
His being a provinciano and his ineptness in speaking fluent Chinese made him a tad insecure. However, it was also this insecurity that made him work harder to be the successful man he is today.
At present, Foodlink has 85 food court branches.
Before, they used fax machine and beepers to monitor their sales. Now, Mr. Dee finds the technology advancement to be too fast. So they mostly use it for data analytics.
Marketing and Social Media
Brands nowadays need to exert effort in marketing.Technology has afforded the company some advantages. Trends include:
- Millenial marketing – Today, a restaurant can get away without that good of a food unlike before. Everything now can pass despite mediocre food if you have good ambiance and service
- Social media is a double edged sword – It can both work in your favor or destroy the brands in a jiffy. That’s why the company and their franchisees need to understand how to protect brands.
Before, Mr. Dee was aghast spending php1 to 3 million just to get an endorser. At that time, they only have 10-15 stores, so why spend as if you have 100 stores?Today, he is more welcoming of such marketing move.
The trick in ensuring that your brand will still be protected despite the speed of change due to social media?
Protect the brand. Build the brand. Invest in the brand. If the brand is strong enough, it can protect itself.
Managing the Brand
The trick of handling a multi-brand company is to treat each brand as a single business unit. Rather than asking them to handle each business unit, each brand exists by itself —- restaurant, retail, fast food and yogurt, and food courts. The youngest daughter for example is in artisan bags and beads.
Each brand lives on its own.
Only purchasing is centralized. There are no commissaries. So, cooking and product delivery are still done in the store straight to the customer. This ensures that the quality of food is fresh and delicious.
For Mr. Dee, to be in the food business, you need to get your hands dirty. “Go inside the kitchen. Make the kitchens big and clean enough. Sure, it looks glamorous from outside. But inside, you smell the fish and pork,” Rikki said. “Fortunately you get to taste a lot of good food.”
Recruitment and Key Qualities
The Dee family firmly believes that their people can see their work ethics and shape the company culture based on their example.
“Be hands on. Live as you intend to do,” Mr. Dee advised.
“Pick on the nitty gritty items,” he added. “So they know you are checking their work.”
He admits that it is indeed challenging to living in and doing business in the Philippines. Rules are being changed very often. So to survive, businesses have to be quick in adjusting and coping with the regulatory changes. Each brand is independently run so this system helps.
“Sad to say, the good people are in Macau, Hong Kong, America and Europe working in casinos, hotels and cruise liners,” he lamented. “Our very own managers get pirated to be waiters overseas. When people ask why the casino waiter is so good, I say, ‘How can they not be good?! They used to be managers back in the Philippines!”
His challenging moments included when Macau opened four casinos all at the same time. Their managers were hired as servers. It was hard to be competitive when the salary at that time was php80,000-120,000 per month, which was 3-4x the Philippine salary rate.
Every time a big casino or hotel opens, they will usually pirate Rikki’s people, so that was really frustrating for the restauranteur.
Michelin Star Restaurant in the Philippines?
Sir Rikki admits it is not easy for a chain store to get a Michelin star. A Michelin star is given to a particular store. So it is possible that while you may have other branches, only one store of yours have a Michelin star.
To earn a Michelin star, the menu must be curated and chef driven. The concept is not necessarily scalable so that you can monitor quality. It is not easy to do this if Mesa is now at 60 stores, with a target of 100 stores by 2021.
Brand Segmentatation: How to Differentiate the Different Brands in the Same Mall
Mr. Dee operates 7 stores in SM Megamall alone. While it is challenging to operate these many stores in one mall, they do have the same belief structure intact — Affordable Luxury.
Affordable luxury means that their customers should want to visit their restaurants 3x a month instead of once every few months.
None of their brands are conflicting. Chin’s Express offers Chinese food. Inihaw offers grilled food while Handaan offers quick and easy Filipino food. This helps them profit. It’s okay for them to be close together because they are not really cannibalizing each other’s sales but their competitors.
How do you choose which brands to carry?
His wife is Malaysian Chinese and their first brand target was actually not Todd English but Olives.
However, Olives did not really fit in their belief culture which was affordable luxury. Even at 7 or 8 years ago, the average spend at Olives was a whopping 50-80 USD!
As luck would have it, they visited the Todd English Food Hall in New York City. This was not done yet in the Philippines so they brought it back. The entire family has to approve of the concept before they bring it back.
Some factors to consider:
- Does the entire family approve of it? Did anyone have any red flags regarding the concept?
- Does it fit in the Philippines? Will the Filipinos be receptive?
- 3. Is it scaleabe? Can we do more than one store? The effort is similar so the concept should be worthwhile to bring back.
They used to be a Michelin star chaser so long as the product is acceptable to the Filipino palate and the price is reasonable.
If there was a choice of 5 to 6 franchises, they will usually get two. If they apply for 10, they usually get 4-5 approved. So it’s a good number.
Warning to the Novices
Not all are good times though. There’s bad franchisors. You will know that once you get the franchisers. They may change the rule in the middle of the business. They can be a pain in the neck. Others might micromanage you to death.
Failures in Life and Business
If you’re seriously handling the business, you need to allow space for failures. Even a restauranteur like Sir Rikki had a few failures up his sleeve.
Take for example, the now defunct Krocodile Grill.
Crocodile Grill was very successful when it opened. The line in their Libis store lasted 2 to 2.5 hours outside. The money they put in — ₱4 million was recovered in 6 months — starting of restaurant boom.
It was a drinking place and at its peak, there were 5 people managing it. It was fun and truly a business between friends. However, since it was owned by everyone, eventually, nobody was really taking care of the business so that failed naturally.
In the end, they decided to close it down and many of the locations converted to Mesa. So there was a happily ever after ending to the story.
There was also the Dish Bar in Rockwell. At that time, it was the hottest place to have a drink. It was opened with good friend AJ Litton.
However, the smoking ban came in. The place needed a smoking booth. Since there was none, people had to go out of the mall to smoke. It was so much of a hassle that the bar died naturally.
After Todd English, they also opened a second restaurant. They thought it would be a hit! The menu was good and they did not scrimp on the design.
However the opening of the mall was delayed and so was the construction. The concept did not fly and lost money. Hence, the lesson is was to study the market and understand the customers. The Philippine market was not ready for seafood. Nobody wanted to do the seafood business because the price was high.
Location is very Important
Sadly, most of the time, you never know if you’re in a good or bad mall until you open. The best location are already occupied by the big players. Just imagine, if your sales today was ok in an ok location, your sales will have a 120% to 150% edge at a very good location!
However, in the mall, you don’t really have the liberty in choosing. You have to take what the mall gives you.
Something to remember though, regarding mall operators:
- SM is a retailer who operated a mall
- Ayala is a real estate who operate a mall
It’s important to know the difference.
What Motivates Sir Rikki
Mr. Dee has expensive tastes and expensive kids. So he has to work hard to provide for them.
What Businesses to Pick
Starting a business is hard. Zero in what’s you’re competitive advantage. Know yourself as a person and as a family. Pick a business that suits this profile.
In his profile, he had the following advantages: His family is in business, funding, connections. So all the businesses they open are somewhat related to each other.
Look, in the food business, according to Zomato, 2000 new restaurants opened last year. Out of the 2,000 opened, 1000 closed. So mortality rate is high.
Find the unique selling point as a brand. Look at the price point before jumping into a business.
Mesa is 80% franchised. Llao Llao is now opening itself up for franchise. The company is mow starting to franchise its home grown brands.
Franchisees do sometimes request changes in the menu to cater to their local palates. For example, in Tagaytay and Gensan, they have special requests when it comes to food.
In Tagaytay, tawilis and bulalo must be included into the menu. If these are not part of it, customers will skip the restaurant. Same with Gensan where tuna, pompano and crab must be included. Hence, Mesa has to support these special requests with localized in store marketing.
As for their foreign partners — Spanish, Italian and American — Singaporeans are most aggressive, detailed, fast, efficient and kiasu. Many things surprise them as they are by the book.
Singaporeans were surprised by the construction delay and the fact that many things were unnecessarily held in customs. That was really interesting for them.
Lessons from the Sy Family
Mr. Dee’s company has been a tenant of SM Malls over the last 30 years. From National Bookstore to Jollibee, everyone started their success at SM North EDSA.
Something to remember, Mr. Sy Sr. would not go into business he knows he cannot handle and cannot be the number one in that field. Check out BDO, SM Supermalls.
If he does not know the business, he will not go into it.
Mr. Sy Sr. has successfully channeled his work ethics to the third generation. Sir Rikki feels that the tycoon was a very inspiring person and thanks him to have jumpstarted his path.
Which brand do you love the most
Whatever you create, you will love it. You love them for different reasons.
Some brands you love because they give more money and doing very well.
Other brands are passion projects, meaning you get into them because it’s interesting for you even if you don’t make as much money.
Regardless, you will always love your own.
Mesa was developed from scratch down from the menu development to the food tasting) so it will always have a special place in the heart. Through what they learned in Mesa, it helped them to see things from beginning to the end.
Partnership and M&A
For their businesses in real estate and fast food, these businesses are mostly fully owned.
They only take partners if they brought the business to them and the partners needed to run someone to run it via a JV.
It is hard to get a partner in the restaurant Business. Everyone has an opinion and there are more arguments because quality of food and service can be very subjective. For restaurants, it’s better that one is active and the rest are passive. Only be partners if that person can bring something into the company.
If you have a foreign partner, it’s better to close your eyes. You win some, you lose some. You can always work to not compete with your partners. For example, you can offer Chinese food but still offer a different segment of Chinese food.
It is not yet time for their company to go for a JV or PE. The kids are all very involved in the business so currently, there’s no need yet to sell out, go public or take in a partner.
They are partnered with the distributor of Mercedes. He was invited to bid for Jaguar so that was a successful partnership. Court opened a wine bar. Kai was other investment that does catering. That way, they can have catering in just a day’s notice, which is convenient.
Most of Filipino businesses go overseas and market to the foreign Filipino market. However, in the US, Mr. Dee is targeting the mainstream. He believes that Filipino food is ready to go global.
“If we will go to LA, San Francisco and New York, we will target the main stream. Being in an area which will allow us to do crossovers to different diners trying Filipino food,” he said.
That’s one great thing about being raised in the family business is that the kids don’t need to kearn it from scratch anymore. If you have kids, teach them entrepreneurship.
Have them spread their wings. Do not ask them to work in the mall.
Stay focused in what you know best. Altogether, they have in 30 years in the restaurant business. 20 years in real estate. Now there are disruptive players in retail.So that’s kinda exciting.